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In one message, Cioffi, of Tenafly, tells a colleague that the returns for February show that one of the funds will likely lose money, and the other did not perform well. Both of the funds were heavily invested in mortgage-backed securities.
"Take a look," he wrote, on March 1, 2007, as he sent a report on their returns to a Bear Stearns colleague. "Don't talk about this to anyone, or I will shoot you."
Yet in other e-mails, Cioffi, 53, a senior managing director, and his chief operating officer, Matthew Tannin of New York, 48, expressed confidence the funds could be saved, and discussed plans to do so.
Tannin, on several occasions, urged investors to put more money in, saying he intended to do so -- though prosecutors claim he never did.
"We are seeing opportunities now and are excited about what is possible," Tannin told the portfolio manager of Zurich-based investment fund Palomar Capital Advisors in an e-mail two days after Cioffi's.
The two men are on trial in U.S. District Court on charges of conspiracy, securities fraud and wire fraud. Cioffi also faces an insider-trading charge, for allegedly taking $2 million of his money from one of the ailing funds to put into a safer Bear Stearns account, using non-public information.
Prosecutors claim Cioffi and Tannin gave upbeat reports to investors, in personal discussions, conference calls and e-mails, while privately fearing the subprime mortgage market had declined so much that the funds were in deep trouble.
Attorneys for Cioffi and Tannin, however, claim that they told the truth to investors, believing that they had a good plan to turn the funds around.
The e-mails were read into the record late Tuesday and this morning by an FBI agent. Prosecutors say the conspiracy ran from March 2007 after the first of the funds showed a loss, to June of the same year, when they collapsed. Investors lost $1.6 billion in the crash, prosecutors say.
The jury heard that on March 15, Cioffi wrote an e-mail to a colleague titled "fear."
"I am fearful of these markets," he said. "Matt said that it's either a meltdown or the greatest buying opportunity ever. I am leaning more towards the former."
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